Let’s say you’ve built up some serious equity in your home — congrats, that’s no small feat! Now, what if you could tap into that equity to pay off high-interest debt, fund a home renovation, or even invest in another property? That’s exactly where a cash-out refinance comes in.
More specifically, we’re diving into the 95% Loan-to-Value (LTV) cash-out refinance — a rare and powerful option for homeowners who need to borrow as much as possible against their home’s value. But here’s the thing: it’s not for everyone, and qualifying can be a bit tricky.
In this guide, we’ll break it all down: what a 95% LTV cash-out refinance really means, how it works, who qualifies, and whether it’s the right financial move for you.
How a 95% LTV Cash-Out Refinance Works
Let’s start with the basics.
A cash-out refinance lets you replace your existing mortgage with a new, larger loan — and you get to pocket the difference in cash. The Loan-to-Value (LTV) ratio determines how much of your home’s value you can borrow.
With a 95% LTV, you’re borrowing up to 95% of your home’s appraised value.
Here’s a simple breakdown:
| Scenario | Amount |
| Appraised Home Value | $400,000 |
| 95% LTV Limit | $380,000 |
| Current Mortgage Balance | $300,000 |
| Available Equity to Cash Out | $80,000 (before closing costs) |
In this example, you could potentially walk away with $80,000 in cash (less closing costs and fees), and your new loan balance would be $380,000.
That’s a big chunk of change you could use for anything from debt consolidation to college tuition to kitchen upgrades. But there’s a catch — or a few, actually. Getting approved for a 95% LTV cash-out refi isn’t as easy as calling your lender and saying “sign me up!”
Who Qualifies for a 95% LTV Cash-Out Refinance? (With List)
Not every homeowner can qualify for this high LTV cash-out refinance. Lenders consider it riskier than your standard 80% LTV loans, so the requirements are tighter. Here’s what you typically need to qualify:
1. Owner-Occupied Primary Residence
Sorry, investors — this option is generally only available for primary residences. Most lenders won’t offer 95% LTV for second homes or investment properties.
2. Strong Credit Score
You’ll usually need a credit score of at least 660–700, though some lenders might require higher, especially if you have other risk factors (like high debt-to-income ratios).
3. Stable Income and Employment
Lenders want to see a consistent work history (typically two years or more), along with income that supports your new monthly payment.
4. Low Debt-to-Income (DTI) Ratio
Your DTI (monthly debt payments divided by gross monthly income) should be under 43%, and preferably even lower. The lower your DTI, the better your chances.
5. Recent Mortgage History
Most lenders want to see at least six months of on-time mortgage payments. Some may require 12 months, especially if you’re looking to max out the LTV.
6. FHA or VA Loan (in Some Cases)
FHA loans can go up to 85% LTV for cash-out refis, but some niche lenders may offer up to 95% for qualified borrowers. VA loans can also be flexible for veterans, sometimes reaching 100% LTV — though that’s separate from traditional 95% LTV offerings.
7. Lender-Specific Guidelines
This is a big one. Not all lenders offer 95% LTV cash-out refis — even if you check every other box. You’ll likely need to shop around and work with a broker or loan officer who specializes in high-LTV products.
I may earn a referral commission from some of these lending entities. It will not make any difference to your pocket.
FAQs: Your 95% LTV Cash-Out Refinance Questions Answered
Let’s tackle some of the most common questions people have when considering a 95% LTV cash-out refinance:
Q: Is a 95% LTV cash-out refinance even available anymore?
Yes — but it’s rare. After the 2008 housing crisis, lenders got more conservative. Today, most standard cash-out refinances are capped at 80% LTV. However, some niche lenders, credit unions, or portfolio lenders still offer 95% LTV options under specific conditions.
Q: What’s the downside of tapping so much equity?
Two big concerns:
- Higher monthly payments: You’re increasing your loan amount, which means bigger payments.
- Lower equity cushion: If home values drop, you could end up underwater on your mortgage.
Q: Are the interest rates higher for a 95% LTV refinance?
Generally, yes. The more you borrow compared to your home’s value, the riskier it is for the lender. That risk often translates into a higher interest rate or additional fees.
Q: How does this compare to a HELOC or home equity loan?
A HELOC (Home Equity Line of Credit) or a home equity loan is a second mortgage, whereas a cash-out refinance replaces your original mortgage. HELOCs are flexible and great for ongoing expenses, but a cash-out refi may offer lower interest rates if you’re locking in a long-term loan.
Q: Can I use the cash for anything I want?
Yes! Once you close, the funds are yours. Popular uses include:
- Paying off credit card debt
- Home renovations
- Tuition costs
- Emergency fund or medical bills
- Down payment on a second home or investment property
Q: What are the closing costs like?
Expect to pay around 2%–5% of your new loan amount in closing costs. These include appraisal fees, title insurance, origination fees, and more.
Conclusion: Is a 95% LTV Cash-Out Refinance Right for You?
If you need access to cash and haven’t owned your home long enough to build up a ton of equity, a 95% LTV cash-out refinance can be a powerful (and rare) tool. It’s especially helpful for homeowners with:
- Strong credit
- Steady income
- Low debt
- A pressing need for liquidity
That said, it’s not without risk. You’re borrowing almost your entire home value, which leaves you vulnerable to market fluctuations. Plus, not all lenders offer this type of refinance — and those who do often have strict requirements.
Before you jump in, it’s smart to:
- Shop multiple lenders (especially credit unions and local banks)
- Compare rates with HELOCs or home equity loans
- Crunch the numbers to see how your monthly payment will change
And, of course, speak with a financial advisor or mortgage pro who can help you assess whether this move aligns with your long-term financial goals.
Ps: Please check out other posts on refinancing loans.
Ps: Get our free guide on how to save more and make informed decisions.